Cautious Optimism

 

Dear friends,

At the outset, I express my profound thanks and gratitude to FADA council and you all for reposing your confidence in me by re-electing me as the President of this august body.  With your support, I will try my best to prove equal to the high standards set by my predecessors and rising expectations of the automobile dealer fraternity.

I look forward to working with my other colleagues in the Council and my fellow dealers spread across the country to take FADA and the auto retail to the next level.

There is no gainsaying that FADA has made long strides since its inception in 1964.  However, I do realise that a lot more needs to be done to make FADA more meaningful to its constituents and to secure due recognition for the significant contribution made by auto retail in the growth & development of automobile industry, in particular, and the national economy, in general.

To sustain the increased pace of activities and to secure the due recognition for the auto retail, it is important and necessary that FADA is further strengthened in terms of its membership base, for which I need your whole-hearted support and cooperation.

I am happy to inform that preparations for the next (8th) Auto Summit of FADA scheduled for 7th & 8th February 2014 at Hotel Le Meridien, New Delhi, are making steady headway. The theme “Auto Retail – Survival Mantra” aptly reflects the current difficult situation. My fellow automobile dealers are finding it extremely difficult to stay afloat due to acute slowdown of the market for over 18 months now. The automobile dealerships are witnessing fewer footfalls and sales volumes, leading to inventory build-up at the dealerships and causing severe stress on the viability of auto retail business. In fact, the current downturn is the worst the Indian auto market has ever witnessed. 

Needless to say, the automobile dealerships have limited elbow room to cut their costs even if they want to. While vehicle manufacturers can resort to lean manufacturing and/or reduction in their contract or temporary workforce, the dealers do not have such an option. On the contrary, the marketing efforts and discounts have to be stepped up to keep the sales ticking.

Therefore, we, in FADA, expect the manufacturers and the Government to come up with special measures to shore up the auto market and auto retail business. The automobile dealerships need to be given support by the manufacturers in terms of interest-free credit for purchasing vehicles and higher margins to stay viable in this turbulent time.

Since the situation is worse than the industry had experienced during the global financial crisis in 2008-09, the Government also needs to extend stimulus package in the form of lower excise duty, higher depreciation for CVs, and prescribing age limit for vehicles & scrappage policy.

Simultaneously, the Government needs to give a push to the infrastructure development and mining activity, which have virtually come to a grinding halt for want of policy initiatives and environmental clearances.

While there has been gloom and doom for auto market for long time, the developments, of late, are encouraging and fuel hope of recovery.

Industrial output posted a surprise rebound in July, rising 2.6% year-on-year after two consecutive months of contraction, net foreign direct investment rose 58% in April-July and deposits from expatriate Indians rose for the first time this fiscal year, pointing to green shoots of turnaround. 

Adding to the cheers, India's exports rose by 12.97% year-on-year to $ 26.136 billion in August 2013. On the other hand, imports during August this year were valued at $ 37.054 billion, representing a negative growth of 0.68% in dollar terms. The exports had returned to positive territory in July with an 11.64% growth after two months of decline. 

The trade deficit for April-August 2013-14 is estimated at $ 73.366 billion, which is lower than the deficit of $ 74.67 billion during the same period of 2012-13. This has given a relief somewhat from the worries on account of Current Account Deficit (CAD).

Another piece of good news is that the easing of Syria crisis has brought about a semblance of stability in crude oil prices in international market. The Rupee is clawing back from a low of 68 against the Dollar. The rapidly falling rupee has aggravated price pressures on crude oil and auto fuels. Sensex too is on the upswing.

It would be too early to uncork the champagne bottles but the numbers are inspiring and give rise to a cautious optimism that the worst is perhaps over for the India’s economy, hit by a slowdown in growth and sharp fluctuation in the currency. 

In the context of prolonged spell of downturn and green shoots of recovery aided by optimism arising out of good monsoon, seen of late, the upcoming Auto Summit assumes an added relevance. Auto Summit 2014 is expected to discuss the whole gamut of issues affecting India’s economy in general and auto market, in particular and to come up with new ideas and Survival Mantra for steering through this difficult phase. A wide spectrum of speakers comprising the senior Government functionaries, industry leaders, representatives of allied businesses, academia and management gurus are expected to address and interact with the participants.

Automotive Dealership Excellence Awards for the year 2013 (ADEA 2013) to the deserving winners in various categories will also be presented in the evening on 7th February 2014 and form an integral part of the Auto Summit 2014 programme. 

I am delighted to note that the Auto Summit 2014 coincides with 50 years of FADA’s journey.  As you may be aware, FADA was founded by four regional auto retail associations in 1964, late T S Santhanam of TVS Group being its Founder President. It is, therefore, an occasion to celebrate as well.

I would, therefore, appeal to my fellow dealers and others connected with auto business to register for the Auto Summit in large numbers. I am sure, it will be an unforgettable, enriching experience for all of you.

I would also request my fellow dealers to participate overwhelmingly in ADEA 2013 in order to make the awards truly representative of the best in the trade.  The nominations for ADEA 2013 are open and the application forms can be downloaded from FADA’s website – www.fada.in or ADEA’s website – adea.in.

As I mentioned in my previous columns, FADA has commissioned a study by Frost & Sulivan on benchmarking of the practices of passenger vehicle manufacturers in relation to their dealers. The study is making a steady progress. Interim findings will be presented by F&S at a meeting on October 5. I am eagerly looking forward to the presentation, as we are likely to get interesting insights into the practices of various passenger car manufacturers. The findings will be shared through the medium of this Journal in due course of time.

Please feel free to send your inputs and suggestions to make FADA more meaningful to its constituents.

With best wishes,

Yours sincerely,

Mohan Himatsingka

 

 

 

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